Founded in the thirteenth century as Aldeanueva de Medellín, the city was an important centre for the Mesta in the Middle Ages. It was the birthplace of Pedro de Valdivia who conquered Chile for the Spanish crown.

Located in the county of Vegas Altas, Villanueva itself is the main gate of La Serena, another county of Extremadura to which it historically belongs. It is separated by only 5 km from Don Benito, forming Villanueva de la Serena-Don Benito, an urban agglomeration of around 60.000 inhabitants, making one of the most important agricultural, industrial and services centres in Extremadura. Mérida (capital of Extremadura) and Badajoz (biggest city in the region) are respectively 58 and 116 km from Villanueva de la Serena.